The Blog of International Judicial Assistance | By Ted Folkman of Pierce Bainbridge

Case of the Day: Moskovitz v. La Suisse

Posted on December 13, 2013

The case of the day is Moskovitz v. La Suisse (S.D.N.Y. 2013). The main claim was brought by holders of marriage insurance policies against their insurer, La Suisse, or Swiss Life. Swiss Life in turn brought third party claims against Moses Kraus, who lived in London, and Caruso AG, a Liechtenstein corporation with offices (at one time, at least) in London.

Swiss Life properly served process on both Kraus and Caruso in London by mail. I say “properly” because service via the postal channel is proper in the UK, because the use of FedEx rather than the postal service is proper, too. And it seems that in the Southern District of New York, unlike some other districts I could name, the clerk actually serves the process himself, as the rule requires. The SDNY’s instruction manual on foreign service probably has something to do with this. I note, however, my view that because FRCP 4(f)(2)(C)(ii) permits service by mail only “if there is no internationally agreed means, or if an international agreement allows but does not specify other means,” which seems to be manifestly untrue with respect to countries that are parties to the Hague Service Convention—an international agreement that is exclusive and thus does not allow unspecified “other means.” So if FRCP 4(f)(2)(C)(ii) does not apply, a plaintiff should have to seek leave to serve process by mail under FRCP 4(f)(3)—unless you’re in the Second Circuit, where the precedent (erroneous, in my view) is that the Convention itself affirmatively authorizes service by mail, and that service is proper under FRCP 4(f)(1). But why, then, did the clerk assert that he was making service under FRCP 4(f)(2)(C)(ii)?

In any case, Kraus moved to dismiss on personal jurisdiction and forum non conveniens grounds. The court denied his motion. Kraus’s lawyer then moved to withdraw, citing Kraus’s failure to pay legal fees. The court granted the motion and ordered Kraus to retain new counsel within thirty days. But Kraus did not obtain new counsel, nor did he answer the complaint. Caruso never appeared in the action at all.

The clerk entered both Kraus’s and Caruso’s defaults, and Kraus moved for entry of default judgment. In both cases, Swiss Life served the motion for entry of default judgment on the third-party defendants by mail. But in neither case did the papers reach the addressees. Caruso no longer had an office at its former London address, and when Swiss Life sought to send the papers to Caruso’s registered agent in Liechtenstein, the agent refused to accept them. The papers addressed to Kraus were returned unopened, although it appeared to the court that he had had actual notice of the motion.

The magistrate judge recommended that the motions for default judgment be denied, on the grounds that the service of the default judgment papers was insufficient and did not comport with due process. You may wonder why service was required at all on Caruso, which had never appeared: a local rule required mailing motions for default judgment, even though FRCP 5 ordinarily does not require service on parties in default for failing to appear.

The District Judge decided to give Kraus some additional time to show cause why a default judgment should not enter. But he held that default judgment should be entered against Caruso.

Why am I writing about this case, which does not appear on the surface to be service of process case at all? It seems to me that the case is a good test case for a few of the positions I have taken on service of process by mail. If Caruso brings a motion for relief from the judgment under FRCP 60(b)(4), it could try to test the correctness of the view that service by mail does not require leave of court. The decision whether this makes sense for Caruso depends on whether it thinks it has assets in a jurisdiction that would be at risk on account of a US default judgment. If not, then it probably makes sense to do nothing, since any US lawyer who appears on its behalf would be an easy target for service of process under FRCP 4(f)(3). But if so, what does Caruso have to lose?

2 Comments

What can Caruso possibly gain from making a motion for relief from the judgment under FRCP 60(b)(4)?
“…what does Caruso have to lose?”
In doing so they would be submitting to US Court, and Liechtenstein may execute the judgement. But as long as Caruso has not appeared and not submitted, Liechtenstein will not enforce. Plaintiff Swiss Life would first need a trial in Liechtenstein to determin if US courts had jurisdiction on Caruso.

I agree, and thank you for the comment. My point, though, was that Caruso should consider a FRCP 60 motion if he thinks his assets abroad are at risk already. If as you suggest, the courts that could get their hands on his assets won’t recognize the US default judgment, then it makes sense for Caruso to do nothing, both for the reason I gave (the FRCP 4(f)(3) issue) and the reason you gave.